startups

82% Start-ups did Not get Benefits of Govt.’s Startup India Initiative: Report

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Around 82% of startups in India are yet to receive any benefit under the Centre’s Startup India initiative, a report.

“Only 18 per cent start-ups and SMEs (small and medium enterprises) in the next poll claimed to have benefited from the Startup India Mission. This means that a huge 82 per cent start-ups or SMEs felt that they did not receive any benefit from the highly publicised scheme,” said the LocalCircles Annual Startup Survey 2019.

LocalCircles, a community social media platform, conducted the survey among over 15,000 start-ups, SMEs and entrepreneurs in the country, it said.

The Startup India initiative was launched in January 2016 with an aim to support the growth of start-ups in the country by providing incubation, funds and tax exemptions among other benefits.


Further, bringing the glare back to the “angel tax” issue faced by start-ups, the survey showed that about 32 per cent start-ups received multiple notices from the Income Tax Department in 2018.

“The angel tax has not made the life of an entrepreneur any easier with many SMEs and start-ups receiving income tax notices this year,” the report said.

“32 per cent said they had received multiple notices while six per cent said they had received one notice. 62 per cent said they did not receive any notices.”

The issue of tax notices to start-ups received public gaze after several start-up founders took to social media after receiving tax notices.


This led to the government ordering the Income Tax (IT) Department on December 24 not to take coercive measures to recover the outstanding angel-tax dues.

The order issued by the Central Board of Direct Taxes (CBDT) said the matter was under consideration and directions were issued to the IT Department not to take any coercive measures to recover the outstanding demand till further instructions.

However, according to the report, issuance of assessment orders against start-ups continued despite the government orders.

“Though an order was issued to not take coercive measures to recover the demand, assessment orders continue to be issued against start-ups,” it said.


About 97 per cent of the people surveyed felt the IT Department officials should be educated on start-up valuations.

On the outlook for the year ahead, 71% of start-up founders said they would like to grow their organisation while 24 per cent said they would close their businesses and the remaining five per cent intend to sell their business.

In a recent report by EDII (Entrepreneurship Development Institute of India), business discontinuation in India is among the highest in the world at 26.4%. Only 5% of the country’s people go on to establish their own startup ventur, which is among the lowest rates in the world, said the report.

In 2017, industry body FICCI, in its report suggested that startups in India need government support to lessen the number of failures and revealed that startups success rate is not up to the mark in the country.


Last year, in a report called Asia’s startup-friendly countries list – 2017, India stands at 8th rank — behind China and even Malaysia because of the very fact that it is still the poorest country in Asia with GDP per capita of $1,710, in 2017 and a high unemployment rate.

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